RE/MAX International’s Senior Vice President of International Franchise Sales Peter Gilmour earlier this week said that there has been a seven per cent year-on-year increase in real estate property transactions during summer in the US. He also stated that South Africa remains one of the better performing global property markets.
“Within the US the real estate market is optimistic despite the continued decline in property sales and ongoing bank repossessions. The projected number for property sales transactions for 2009 is 5 ½ million and although a far cry from the figure of 8 million recorded for 2005 is still positive compared to results recorded for 2008.
“The number of pending home sales, properties that have sold but not transferred, is up for the seventh month in a row and is at the highest level since March 2007. A higher Pending Home Sales index indicates better sales in the coming months and shows buyers are returning to the market.”
In terms of transactional activity, Gilmour said that first time homebuyers account for approximately one third of all property sales transactions within the US largely due to the US$ 8 000 tax subsidy deduction policy instituted by the government. Sharing the remaining balance are investors who, making the most of a depressed sellers market, are buying homes for between 20 and 30 percent of the market value of two years ago, and then there are the ordinary buyers, who have remained unaffected by market conditions.
“Homebuyer subsidies have not yet been renewed which is a concern to the US real estate industry. As a result strong industry lobbying efforts are being undertaken in a bid to obtain further extensions to homebuyer subsidies and in so doing unlock the door to recovery of the US property market.”
“Leading the journey out of the recession are the states California, Arizona and Nevada that were first affected by the recession. We anticipate that those states along the East Coast will take a little longer to recover.”
“Amidst a slow recovery, obtaining a mortgage remains a rigorous task. Banks remain conservative and there has been no substantial change in lending policies. Potential home buyers are still required to submit 10 – 20 per cent cash deposits. The very complex US credit rating system is also severely hampering sales.”
Gilmour further added that commercial property is taking a tremendous strain at the moment.
“Vacancies are up in all areas, businesses and individuals are extremely cautious and conservative when considering their needs, and rental negotiations are also difficult. The returns on commercial properties will drop substantially which will impact negatively on their value.”
Gilmour advised that the most active property sales transactions are taking place in the entry-level US$ 100 000 – 300 000 price bracket. “Buyers are looking for smaller units that are close to transport infrastructures and place of work. The luxury property market is very slow throughout the US although distressed sales are attracting investors.”